DEPARTMENT OF ACCOUNTING AND CORPORATE GOVERNANCE
ACCG3020 Taxation Law and Practice Session 2 2021- Take-home
Assignment Information and Instructions
Weighting of this assessment task: 20%
Format of submission: Microsoft Word document, 12- point Times New Roman
type, double spaced.
Method of submission: on-line, uploaded to iLearn via Turnitin
Released date and time: Thursday 30 September 2021 at 12 noon
Due date: Tuesday 5 October 2021 at 5 pm
Your written response to this assignment must be presented in a report
format. Bullet points are not acceptable.
1. In problem-type question, remember to:
1. clearly understand the facts and the question.
2. state the tax issue(s) you have identified from the facts.
3. identify the relevant law, tax rulings, legislation, and cases.
4. apply the law to the facts.
5. form your conclusion based on your discussion of the law and state additional
information that may be needed to clarify your conclusion. When answering a
question, it may be useful to implement the following approach: MAIN HEADING
Identify the relevant parties (e.g., in a taxation law exam, this may be the taxpayer)
This may be a main heading.
SUBHEADING
Identify the transaction/subject-matter (e.g., an item, service or scenario) This
will establish a relevant subheading.
YOUR ANSWER should be under each subheading
Issue Identify the issue.
Rule Identify the relevant law(s).
Application Discuss the relevant rule(s)/law(s) by applying them to the
facts. Conclusion Round-off your discussion by forming a conclusion.
Responses to this assessment task must not exceed 1,500 words.
No extensions will be granted. There will be a deduction of 10% of the total
available marks made from the total awarded mark for each 24-hour period or part
thereof that the submission is late (for example, 25 hours late in submission 20%
penalty). This penalty does not apply for cases in which an application for special
consideration is made and approved. No submission will be accepted after solutions
have been posted.
IMPORTANT:
? You must cite relevant cases, ATO rulings, and legislative references to
support your answers.
? Your response must also provide reasons that explain and support
your answers.
Case Study
You are a chartered tax accountant working in Epping, NSW. A client by the name of Mr.
Doolittle walked into your office for tax accounting advice concerning travel expenses and
legal expenses he personally incurred whilst holding a Chief Executive Officer (CEO) position
in a pu
blic listed Company titled Blue Sphere Pty Ltd.
Given his position as a CEO of Blue Sphere Pty Ltd, Mr. Doolittle also had to travel to
promote his company, at least 1 month in a year, to countries such as the United States
of America and the United Kingdom.
For example, in August 2021, he obtained a general covid clearance from the Australian
Government to travel to the United Kingdom to set up a subsidiary business entity in that
region. He stayed in London at the Bloomsbury Hotel. The Hotel stay for three weeks was
A$13,314 including GST. His return flight fare on Qantas from Sydney to London, business
class (Flexible Fare) was A$25,000 including GST. He incurred meals and travel expenses in
London for A$10,000 including GST. In his fourth week of his stay in London, he travelled to
Manchester to visit his relatives, Uncle and Auntie Rob. When he was in Manchester whilst
visiting them, he stayed at the Edwardian Manchester for 1 week, which cost him A$3,318
including GST. Mr. Doolittle informed you that he incurred these expenses for an income
producing activity.
When he returned to Sydney, he was informed by his secretary about an article that Rolph
News published in the newspaper regarding Mr. Doolittle. Mr. Doolittle engaged his lawyers
to bring an action in defamation against Rolph News for publishing an untrue statement
about him. Mr. Doolittle alleged Rolph News caused harm and emotional distress to him
because of the publication in the newspaper. Essentially, Mr. Doolittle sued the media
broadcaster, Rolph News over an article published in the newspaper that alleged him as a
perpetrator in a historical sexual assault case committed against a former female business
colleague in 2010 at Blue Sphere Pty Ltd. The legal proceedings were commenced in the
Supreme Court of NSW, however, was settled at Mediation for an undisclosed amount. Mr.
Doolittle was invoiced by his legal firm, $750,000 including GST for defending the claim
against Rolph News. Subsequently, Rolph News withdrew the article published in the
newspaper which included a public apology to Mr. Doolittle. Mr Doolittle informed you that
he incurred these legal expenses as part of his income producing structure and not income
producing processes.
Required:
(a) Discuss residency and source issues in relation to Mr. Doolittle? (5 marks)
(b) Advise Mr. Doolittle as to whether the expenses incurred in the United Kingdom
would be deductible for income tax purposes? (5 marks)
(c) Advise Mr. Doolittle as to the deductibility of legal expenses? (10 marks)